Housing and Planning Bill

Written evidence submitted by the Fairhazel Housing Co-operative (HPB 96)

1.0 Purpose Of This Submission

1.1. This submission is to express the opinion of Fairhazel Housing Co-operative regarding the Housing and Planning Bill 2015, in particular Pay to Stay.

2.0 Summary

2.1. Fairhazel Housing Co-operative is a fully mutual housing co-op founded in 1975 in West Hampstead, North London. We have 129 flats and a nominations agreement with Camden Council who have supplied the majority of our member-tenants.

2.2. We manage ourselves, depending on our member-tenants volunteering their time, expertise and skills unpaid.

2.3. As members of a fully mutual co-op we are effectively both landlord and tenant. Unlike other social tenants we do not have secure tenancies, right of succession, or the Right to Buy.

2.4. Our co-op supports a longstanding tight-knit embedded community, where neighbours know and support each other. This is extremely unusual in London and confers considerable social benefits.

2.5. As a small-scale, highly cost-effective, community-enhancing social housing provider we are especially concerned that Pay to Stay would be costly to administer, would have highly negative impacts on our members and our local community, and would not bring any wider social benefits. Pay to Stay threatens our existence and the homes of our 200 member-tenants and their families.

3.0 Background information about the Fairhazel Co-operative

3.1. Fairhazel Housing Co-operative is a fully mutual housing co-op founded in 1975 in West Hampstead, North London, making us London’s oldest housing co-operative.

3.2. We are a Private Registered Provider with 129 flats and a nominations agreement with Camden Council who have supplied the majority of our member-tenants.

3.3. Our Victorian properties are kept in excellent condition inside and out. All our costs (including mortgage repayments; staffing; maintenance; kitchen and bathrooms replacement programme; legal costs; auditors; gardening) are paid from our rental income, which is kept low in exchange for voluntary contributions from member-tenants. Through due diligence we have considerable reserves, which we have and are using to buy the freeholds of our expiring leasehold properties.

3.4. The Fairhazel Co-operative supports a longstanding tight-knit embedded community, where neighbours know and support each other. This is extremely unusual in London and confers considerable social benefits. Many of our member-tenants were involved in setting up our co-op, and many of their children now live in the co-op, raising their own families and making their own voluntary contributions to the co-op’s management.

4.0 Fairhazel Co-operative’s Management

4.1. We have for decades been running Fairhazel ourselves as unpaid volunteers with additional help from a small salaried staff (3 full time equivalents). We work as a team comprising a 12-member management committee and six affiliated working parties. We rely on members to voluntarily give their time, expertise, and skills to conduct the financial, maintenance, and housing management of our properties, with support from our staff who are managed by the management committee.

4.2. Our management is structured differently to that of a Housing Association. As members of a fully mutual co-op we are effectively both landlord and tenant. Unlike other social tenants we do not have secure tenancies, right of succession, or the Right to Buy.

4.3. The Government, in excluding housing co-operatives from the Right to Buy, seems to have recognized that we are a unique form of social landlord, where each member is an equal shareholder in the company.

5.0 High Income Social Tenants: Mandatory Rents (‘Pay to Stay’)

5.1. As a small-scale, highly cost-effective, community-enhancing social housing provider we are especially concerned that Pay to Stay would be costly to administer while having highly negative impacts on our members and our local community without bringing any wider social benefits. Pay to Stay will ultimately lead to the demise of an organisation like ours, which relies on volunteers freely giving their time and expertise, and it therefore threatens the homes of our 200 members and their families.

5.2. The proposed threshold of £40,000 per household in London is unrealistically low and. It is estimated that households must earn at least £82,226 (in 2013) to afford market rents in London (House of Commons Briefing Paper 06804, ‘Social housing: ‘pay to stay’ at market rents’), and this is probably an underestimate for our area, which is extremely desirable, and where other costs of living are very great (e.g. £14,000 per year for a full time council nursery place). For example the market rent for a one bedroom flat is in the region of £20,000 per year and £36,000 per year for a three bedroom flat (big enough for one family with two children of different sexes).

5.3. Market rents in our area are four times the Fairhazel Co-operative rent levels and are far beyond the means of our members, many of whom work – or have worked - in keyworker professions such as teaching and nursing. Some self-employed members may reduce their earnings in order to be able to stay, in other words ‘earn less to stay’. Others in even moderately salaried employment will be forced to move on because market rents in our area are so high.

5.4. As a co-operative we rely on volunteers to manage our affairs, many of whom bring professional expertise and experience. Huge rent increases would force these tenants to leave, which would seriously compromise our ability to manage ourselves and threaten our viability.

5.5. We have recently arranged mortgages to buy the freeholds of several of our expiring leases. In making financial projections we had no idea the Government may require us to introduce costly new administration to monitor tenants’ salaries. Many of our members are self-employed with fluctuating salaries. Pay to Stay would require much monitoring at considerable unexpected expense to the co-op.

5.6. Pay to Stay would very likely mean that rent arrears, currently low, would increase, and would require a significant increase in administrative time to manage.

5.7. Fully mutual co-operatives such as ours can only work if everyone is on an equal footing and pulling together. Under Pay to Stay some tenants would pay market rents and others not, which would lead to divisions within our community making it difficult to manage ourselves.

5.8. Many tenants in the Fairhazel Co-operative have contributed literally years of unpaid work to help this community grow and form a unique identity. We have, in this sense, already ‘paid’ to stay.

5.9. The Government proposes that Pay to Stay would encourage home ownership through the Right to Buy. Tenants of fully mutual co-operatives such as ours do not have the Right to Buy, rendering this redundant.

6.0 Conclusion

6.1. Fairhazel Co-operative has successfully and prudently managed itself for 40 years, keeping rents low, reducing public costs of housing benefits, ameliorating housing need, and providing a valuable social asset to the local area.

6.2. Co-operatives should be considered a private, autonomous, social enterprises, able to determine rents and other internal policies according to their particular situation, within the regulation provided by the Financial Conduct Authority and the Homes and Community Agency, and not as directly dictated by Government.

7.0 Suggested amendment regarding Pay to Stay

7.1. ‘This legislation does not apply to fully mutual housing co-operatives’

November 2015

Prepared 1st December 2015